Health and wellbeing is becoming a powerful force in the workplace with employees in many cases placing it above pensions in their priorities.

The Health & Protection Roundtable in association with Vitality heard how as a result employers are taking a greater interest in the health of their employees.

Advisers are also advocating a focus on preventative healthcare through the workplace but as premiums rise driven by higher claims, organisations are not always able to meet those objectives.

“Employers are now recognising from a business perspective the link between their people strategy and their growth strategy and the importance of aligning that,” explained Howden Employee Benefits head of corporate healthcare Hugh Bennett.

“Whether they’ve got there themselves or they’re being better educated by intermediaries, think how common chief people officers are now, those sorts of positions are so prevalent in our market.

“Whereas before the insurance was there as a bit of a tick box, now it’s a huge piece for them and the pressures on HR from a cost of living crisis, wage inflation and talent war perspective is crucial to their overall growth strategy.”

PMI on par with pensions
This was echoed by IHC senior consultant Paul Roberts who added: “If you look at the talent war it used to be focused on pensions, and then there was a huge step change to medical insurance.

“Now medical insurance is way up there with pensions and for younger adults who were coming through mental health, healthcare is right up the top of their of their demand or requirements.”

But there is pressure on employers as premiums are beginning to rise sharply with increasing claims experience.

The panel noted that some clients may have been lulled into a false sense of security over the last two or three years’ renewal cycles because claims were artificially suppressed due to the pandemic. This meant renewal premiums were artificially suppressed.

“But the massive explosion in claims we’ve seen through the course of this year, almost playing out in real time on a multiple month basis, is really starting to grab our attention,” noted Broadstone head of health and protection Brett Hill.

“Employers are now starting to ask for help and we’re now having to educate them that they are going to have to spend some money, invest some money to get ahead of this problem.

“But a degree of this problem is now baked in and it’s going to take three to five years to work through their claims fund.”

The only positive change
This recognition of rising costs and a need to keep a lid on claims as much as possible is pushing organisations to consider different strategies and for insurers to be more creative.

“We often say to corporates there are three ways in which you can cut costs: one is you insure for less; two, you insure fewer people or three, you make them healthier, and the making them healthier is the only positive change they can make,” said Aon principal Rachel Western.

“It’s absolutely right that the prevention and wellness strategy is driving all of that forward for clients and they need to bespoke it.

“We’ve had a private medical market that’s been very generic, you can pretty much compare insurers’ terms and conditions and cover levels.

“Corporates need to start focusing much more in-house at what their key risks are and then structuring their cover more to meet those needs and prevention needs to play a big part in that.”

Claims incidence driving cost rise
Indeed many organisations are embracing this approach and recognise its importance, as Benefex head of health Rebecca Rann explained.

“I have a customer who has set up a non-smoking seminar for their employees and leads it, but even companies doing all of that good stuff are still seeing claims rise,” she said.

“That customer particularly is still seeing their claims incidence going up 40% and that’s what’s driving their claims cost.

“I’m not seeing as many high value claims as I was expecting to see post-pandemic, I thought delays in screening would mean that maybe conditions were being found a bit later and there are those high value claims that come through.

“But what’s really driving most customers costs at the moment is the claims incidence and the number of claims that are coming through.”

And this is part of the problem, that despite doing their very best to keep staff health and prevent illness, employers are still battling with the health of a nation.

“The point about prevention is, corporates are doing it or being asked to do it, but we’re asking them to tackle a problem that is much bigger than their own,” continued Howden’s Bennett.

“The reality is no government has been brave enough to make the decision to crack down on those areas.

“We all know that’s the problem, so you’re asking corporates to change socially celebrated norms – it feels that it’s almost bigger than us.”